THE HINDU
FRIDAY, DEC 26, 2003.
VRS scheme has had a negative impact: study
By Nagesh Prabhu
Nearly 70 per cent of the employees who opted for VRS did not get
new employment, and only a few opted for self-employment to sustain the family
income.
The income of employees came down by 55 to 65 per cent after they
opted for VRS and the consumption level reduced by 20 per cent, a project
study, "Karnataka Public Enterprise Reform Programme
(2000-03)," by the World Bank,
The study covered PSEs such as NGEF, Mysore Lamps, Karnataka Soaps and Detergents Ltd.,
Karnataka Vidyut Kharkane,
and Mysore Electricals
Ltd., located in
Employees in all income categories opted for VRS. But the number
was more in the higher income category and the higher age group (50 to 53
years). This was because of the high VRS money they could get. People in the
middle-income category took VRS because of poor health, bad habits, or for
clearing debts.
In contrast, those in the low-income category, the
"inefficient", and poorly educated ones decided to leave the job due
to the perceived uncertainties resulting from privatisation.
As private managements stress on higher efficiency, those in the low-income
category opted for VRS fearing that they may be retrenched without any
benefits, the study points out.
A large majority of such employees (70 per cent) were interested
in new jobs, but a few of them did not attempt for alternative employment due
to pessimism that jobs were not be available.
Some 70 per cent of the employees of tottering PSEs
who took VRS are still unemployed compared to 61 per cent of the employees of PSEs that are to be privatised.
About 40 per cent of the employees who opted for VRS from PSEs
to be privatised have opted for self-employment.
A few of them got into avenues that do not need much investment
such as giving tuitions and consultancy.
Though 38 per cent of employees with good education and technical
background opted for VRS, only five per cent have secured jobs and six per cent
are self-employed. The poor quality of the Safety Net Training Programme provided by the Government for employees opting
for VRS is one of the reasons for the non-availability of new jobs. "Many
employees treated this scheme not as a voluntary retirement scheme but as a
compulsory retirement scheme," the study pointed out.
In the case of use of VRS money, a pilot survey conducted for the
study showed that post office saving schemes were the most favoured
for investment as currently the rate of interest is high. Thirty-eight per cent
of the employees invested money in post offices and other avenues and 34 per
cent of them in real estate. Investment in post office savings was the top
priority for employees.
Interestingly, 60 per cent of the employees who opted for VRS from
PSEs that are to be privatised
have another earning member in the family compared to 23 per cent of employees
who opted VRS from PSEs that
are to be closed. However, what is alarming is that 80 per cent of the families
have children who are still studying; some of them in school, the study says.
In the past three years, 4,000 employees have chosen VRS and the
average payment for them has been Rs. 3.50 lakh to Rs. 4 lakh.
The Government spent Rs. 275 crore
on VRS for employees of PSEs included in the first
phase of reforms. Another Rs. 500 crore
is required for making VRS payments in the remaining commercial PSEs.
At the end of March 2003, there were 90 PSEs
in the State. Of them, the Government decided to privatise
or close 39 PSEs, 20 in the first phase and 19 in the
second phase.
The study noted that progress in assets sales had been very poor
and the asset values were deteriorating rapidly. For instance, in nine PSEs, which had been selected for closure during the first
phase of reforms, had assets over Rs. 1,000 crore, but these were being wasted, it said.